2018 Guide to Effective Proxies

2.17.6 CEO to median employee pay ratio | 389 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES Executive Compensation Tables CEO Pay Ratio The Dodd-Frank Reform and Consumer Protection Act includes a mandate that public companies disclose the ratio of the compensation of their CEO to their median employee. Our CEO-median employee pay ratio calculation for 2017 is 366:1. For information on how we calculated this ratio, see pages 92-93. Grants of Plan-Based Awards Name Grant Date Estimated Possible Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards (1) All Other Stock Awards: Number of Shares of Stock or Units (2) (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($/Sh) Grant Date Fair Value of Stock and Option Awards ($) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Stephenson 1/26/17 2,950,000 5,900,000 11,800,000 119,942 299,856 479,770 99,952 16,699,980 Stephens 1/26/17 950,000 1,900,000 3,800,000 50,275 125,688 201,101 41,896 6,999,984 Donovan 1/26/17 1,091,667 2,183,333 4,366,666 50,275 125,688 201,101 41,896 6,999,984 9/28/17 16,927 42,317 67,707 14,106 2,202,754 McAtee 1/26/17 750,000 1,500,000 3,000,000 26,574 66,435 106,296 22,145 3,699,987 Stankey 1/26/17 1,000,000 2,000,000 4,000,000 50,275 125,688 201,101 41,896 6,999,984 Note 1. Represents performance share awards, discussed beginning on page 71. Note 2. Represents restricted stock unit grants, discussed on page 72. The units granted in 2017 are scheduled to vest and distribute in January 2021. Units will also vest upon an employee becoming retirement eligible; however, they are not distributed until the scheduled distribution date. All of the Named Executive Officers except for Mr. McAtee were retirement eligible as of the grant date. Employment Contracts Messrs. Donovan, Stankey, and Stephens Both the 2011 Incentive Plan and the 2016 Incentive Plan provide that in the event an employee retires while retirement eligible under the plan, an award of performance shares will be prorated based on the number of months worked during the performance period. AT&T has provided that performance shares granted after September 28, 2017, to Messrs. Dono- van, Stankey, or Stephens will not be prorated if they remain employed through December 30, 2020. Further, the Company has agreed that their performance shares shall not be prorated if (a) they report to an officer or employee of the Company or any of its affiliates other than the Chief Executive Officer of AT&T Inc.; or (b) if the Company creates a higher-level position (e.g., Vice Chairman or Chief Operating Officer of AT&T Inc.) and they are not placed in that role or an equivalent role. John Stankey Following the acquisition of DIRECTV, AT&T entered into an agreement with Mr. Stankey, whose responsibilities included the oversight of DIRECTV operations. The Company agreed to reimburse him for state and local income taxes that he incurred while on business travel outside of Texas (Texas is his primary work location and residence) as well as the income taxes owed on the reimbursement of such state and local income taxes. Amounts reimbursed are reported annually in the Summary Compensation Table under All Other Compensation. This agreement ended for compensation awarded after August 1, 2017, con- current with his assignment to Senior Executive Vice President – AT&T/Time Warner Merger Integration Planning. | 80 | www.att.com Total of 02 pages in section AT&T, INC.